IFA National Dairy Committee Chairman Sean O’Leary has said that, while the first GDT auction for October showed a little weakness, butterfat and cheese prices remain historically high, and EU latest commodity returns remain strong at 41c/l.
After a 5c/l processing cost is deducted, this would suggest a price equivalent of 36c/l + VAT, and as other European dairy farmers are continuing to receive increasing milk prices, it is well justified for Irish producers to expect at least 1c/l on September milk, he said.
“Friesland Campina will pay suppliers an extra 1.25c/kg for October, or a milk price equivalent to 37.65c/l at the Irish 3.3% protein and 3.6% butterfat standard. Arla too have increased their October milk price by 1c/kg, which for their UK producers will translate into a milk price equivalent to 33c/l allowing for the exchange rate. Also in the UK, First Milk have flagged an October milk price increase of 1 to 1.1ppl to up to 34c/l,” Mr O’Leary said.
“Irish co-ops will be meeting in coming days to decide on their September milk price, and I believe board members must ensure that suppliers get at least 1c/l more for their September milk,” he said.
“Global milk production continues to grow a lot more slowly than expected. New Zealand is experiencing a very wet spring, which has resulted in a 1.56% decrease in August supplies (Fonterra collections were down 2.5%), a trend which has persisted into September, and which could damage their mid-October peak. While the US milk output is growing slightly faster at 2.1%, the EU’s output growth is being held back by France and Germany’s only very modest recovery,” he said.
“Despite the 2.4% decrease in this week’s GDT weighted average auction price for commodities for sale to April, it remains a fact that butterfat and cheese returns continue at historical levels, and demand for butter and cheese outpaces supplies globally,” he said.
“In summary, markets remain strong despite some potential headwinds, and dairy farmers in Europe and further afield rightly continue to benefit in increased milk prices – Irish co-ops must make sure Irish farmers do not miss out,” Sean O’Leary concluded.